The job market in Chinese private equity is heating up as mainland funds expand at an unprecedented rate and deregulation opens the door for more foreign players.
Chinese-owned PE funds have so far done $16.4bn in cross-border deals this year, which already surpasses the previous annual record of $11bn in 2012, according to Asian Venture Capital Journal.
In July China announced that it would allow foreign PE funds to set up in the country, raise money from domestic investors and invest in mainland stocks.
Headhunters say the industry’s expansion is leading to more recruitment at both local firms (domestic leaders include AGIC, Legend Capital and Golden Brick Capital) and their overseas rivals (such as Carlyle and TPG, which are currently engaged in a mainland bidding war).
Investment bankers are needed to fill new jobs because the PE talent pool is undeveloped. But although hiring is rising, it’s still small scale and PE firms can afford to only consider elite talent.
“Moving from capital markets to private equity is doable in China,” says Alistair Ramsbottom, managing director of Shanghai search firm The Blacklock Group. “However, competition is intense and firms don’t always move quickly when making hiring decisions.”
Private equity, not hedge funds or fintech, is the “ultimate holy grail” for Chinese investment bankers, says Jason Tan, a partner at search firm Carlson Harriet in Shanghai. “Nine out of 10 bankers would love to work in PE. They are lured by the prestige, high potential level of returns, and opportunity to work under a star manager. “
Tan says PE roles – including more junior ones in documentation, analysis, research and valuation – can easily attract more than 50 applications within three days of being advertised, mainly from bankers. But around 90% of these applicants won’t even get job interviews.
“If you want a job at AGIC with Henry Cai, for example, you’ll probably need to have worked with him in the past at Deutsche Bank or have competed with him on a few deals,” says Tan.
Candidates must also boast an Ivy League education, fund-raising experience, and guanxi (relationships) with top mainland business owners and financiers, say recruiters.
“PE firms will look closely at your achievements in banking over the past five years, and in China especially they’ll also look at who your mentor was. Who did you learn from?” says Tan.
Foreign and domestic private equity firms are unlikely to hire from each other as their “research styles and internal cultures” are too different, says Ramsbottom.
Tan says local firms are doing about 80% of Chinese PE recruitment currently, but the globals have even tougher hiring standards.
“Letting more foreign PE firms into China will shine more light on the quality of candidates here,” he adds. “On top of everything else, you’ll need good English and top-tier foreign investment bank experience. The Chinese houses are slightly more open to people from local investment banks or Big Four consultants.”
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